Israel would likely lose over $840 million (NIS 3 billion) in tax revenues and royalties in the event that Cyprus began development procedures and exporting natural gas from the Aphrodite field without a signed agreement that arranges the division of the gas between the two countries. This is the conclusion from a background economic paper prepared by Dr. Yehoshua Hoffer for the gas pasrtnership, which owns the Ishai license in Israel's economic waters bordering Cyprus's Aphrodite field.
Minister of National Infrastructures, Energy and Water Resources Yuval Steinitz made it clear in an interview with "Globes" earlier this week that Israel has no intention of relinquishing its share of the Aphrodite gas field. However, one of the Ishai field's owners Israel Opportunity Energy Resources (TASE: ISOP.L) continues to be concerned. This is mainly because of reports in the international media that Cyprus in in the final stages of signing an agreement to export gas from the Aphrodite field. As the gas in the Ishai field on the Israeli side is part of one continuous geological strata, gas production depends on agreements between the two countries.
Israel Opportunity chairman Rony Halman said, "Since a cooperation agreement was signed between Israel and Cyprus seven years ago, Israel has abstained from enforcing it. According to the media, even today the government does not intend taking any action and will postpone everything for several months. The previous minister said the same things. Nothing has changed. We are talking about a futile move."
Back in 2010, Israel and Cyprus signed an agreement setting the border between the two countries' exclusive economic waters. The agreement for arrangements for developing gas fields that run beneath the border was meant to be signed several months later but it didn't happen.
Earlier this week, "Globes" revealed that after seven years of negotiations between Israel and Cyprus, the two countries will turn to international arbitration in the coming few months to resolve the dispute about the Aphrodite/Ishai gas field. The issue will also be discussed at the trilateral meeting in Cyprus between Israel, Cyprus and Greece next week.
Halman said, "There were also promises about this in the past and I don't buy it. In the past they also traveled to Cyprus and there were talks. The time has come for action and not just talking and postponing. I see no reason for an additional postponement."
The background research prepared for the Ishai partners by Dr. Hoffer found that gas production at the Ishai field is likely to yield for Israel a cash flow of $840 million in real value not capitalized - the government take is about 60% of the revenue of the Ishai field with the remaining 40% going to the developers and investors, some of them among the public at large, who have invested in a higher risk stock.
Published by Globes [online], Israel business news - www.globes-online.com - on May 3, 2018
© Copyright of Globes Publisher Itonut (1983) Ltd. 2018